Our strongest convictions

our strongest convictions

#1

Economic soft landing

Recent data has continued to point to resilience in the US economy, in line with our scenario of a soft landing. In Europe, growth is likely to remain sluggish. A recession in either the US or Europe does not seem the most likely scenario. The delayed impact of monetary policy and the resorption of excess savings should be offset by a boost to household purchasing power from the fall in inflation.

#2

Central banks: moderate rate cuts expected

Inflation reached levels close to 3% year-over-year in the United States and the euro area at the end of 2023, compared with peaks of at least 9%. Against this backdrop, central banks are likely to begin a cycle of rate cuts this year. They could, however, remain cautious and cut rates only gradually given persistent tensions in the labour market, which may only allow a slow return to the 2% inflation target.

#3

Playing the diversification card

In 2023, the majority of asset classes experienced both high volatility and positive performances. Consequently, broad diversification was beneficial. Given the pivot of central banks, the economic slowdown and geopolitical risks, we have decided to maintain a global diversified position.

#4

Preference for US equity markets

Equity markets should benefit in 2024 from the same tailwinds as in late 2023: the prospect of lower key interest rates and inflation, against a backdrop of resilience in the global economy and corporate earnings. These favourable factors should persist into 2024. We remain overweight US equities: despite a gentle slowdown ahead, the US economy is likely to remain stronger than its peers, supporting US corporate earnings. We are also maintaining our underweight on Emerging Markets mainly due to the continuing difficulties of the Chinese economy.

our strongest convictions

#5

A favourable environment for corporate bonds

In 2024, the policies of the main central banks will come to a head against a backdrop of falling inflation: given the persistently high level of interest rates, bond markets remain attractive, especially highly rated corporate bonds. We are maintaining our overexposure to the latter, which not only offer an attractive carry but should also benefit from solid corporate balance sheets.

#6

Remaining neutral on the dollar

Changes in monetary policy have been the main driver of currency movements in 2023 and we anticipate this will be the case in 2024 too. We expect the Fed, ECB and BoE to cut rates in near-synchrony. Therefore, we are maintaining our neutral stance on these currencies.

#7

Gold underweight maintained

Despite a strong end to the year for gold - partly due to the fall in the dollar and interest rates - we are maintaining our underweight position in the metal, which appears less attractive in the context of high interest rates.

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